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Kroger to buy Home Chef in latest move to get meal kits in grocery stores

Key Points
  • Kroger is buying meal kit company Home Chef.
  • Blue Apron's stock has struggled since going public last June. It announced last month it would start selling meal kits in grocery stores this year.
  • Rival grocer Albertsons acquired Plated, another meal kit company, last summer.
An employee bags a customer's purchases at a Kroger store in Peoria, Illinois.
Daniel Acker | Bloomberg | Getty Images

Kroger is buying meal kit company Home Chef as brick and online services continue moving to brick and mortar grocery stores.

The initial price is $200 million and could go up to $700 million over the next five years in exchange for Home Chef meeting certain milestones, including "significant" growth of in-store and online meal kit sales, the companies said.

Home Chef posted $250 million in revenue last year and posted two profitable quarters, the companies said. Investors have worried whether these services, while popular, could be profitable.

Blue Apron's stock has struggled since going public last June. Shares closed at $2.97 on Wednesday. They started trading at $10 per share in their initial public offering.

The company announced last month it would bring its kits to grocery stores this year.

Rival grocer Albertsons acquired Plated, another meal kit company, last summer. It plans to roll out the kits to hundreds of stores by the end of the year.

Kroger and other grocers are trying to keep up in e-commerce. Amazon is planning to give Prime members more perks at Whole Foods, the natural and organic grocer it acquired last year in a shocking move that rattled the industry.

Competitors have been racing to keep up with changes in how consumer are shopping. Kroger signed an exclusive deal last week with Ocado to receive the U.K.-based online retailer's grocery delivery service.

Shares of Kroger were flat on the news. They've slid nearly 11 percent this year.